2009 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 1-13-2009 

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Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

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w . vi ll anova . e du . Re c omme nde d C it at ion " Aldr ich Nine As s oc v

. F oot L ocke r " (2009). 2009 D e cisio n s . P ape r 2049. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2009/20491 NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

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____________ A L D R IC H N IN E A S S O C ., a G ener al Par t ner s hi p, A ppel l ant

vs. F O O T L O C K E R S P E C IA L T Y , IN C ., a s S u c c e s s o r i n In te re s t to F .W . W O O L W O R T H C O .

____________ APP EAL F ROM THE UNI TE D ST ATE S DI S TRI CT C OURT

FOR TH E DI STRI CT O F NEW J ERSEY ( D . C . C i v. N o. 06- cv- 03981) D i s t r i ctJ udge: K athar i ne S. H ay den

____________ A r gued D ece m ber1, 2008 B efore: A M B R O , W E IS and V A N A N T W E R P E N , C i rcui tJudg es.

( Fi l ed: J anuary13, 2009)

____________ Wi l l i a m A . Dr e i e r , E s q u i r e ( AR GUE D) R o b ert L . R itter, E sq u ir e L o ri A . Jo h n so n , E sq u ir e S u san a P . C ruz , E sq u ir e S c h i f f ma n , Ab r a h a m, Ka u f

ma n & Ri t t e r , P . C. T hr ee U ni ver s i t yPl aza , Sui t e 410 P. O . B ox 568 H acke ns ack, N ew J er s ey076022

A t t or ney s forA ppel l antA l dr i ch N i ne A s s oci at es Ge o f f r e yW. Ca s t e l l o , I I I , E s q u i r e ( AR GUE D) L au ri A . M az zu ch ett i, E sq u ir e Kel l e yDr y e & W a r r e n LLP 200 K i m bal l D r i ve Par s i ppany , N ew J er s ey07054 A t t or ney s forA ppel l ee FootL ockerSpeci al t y , I nc.

____________ OP I NI ON W E I S, C i r cui tJ udge.

Pl ai nt i ff A l dr i ch N i ne A s s oci at es appea l s fr om an or derof the D i s t r i ct C our tgr ant i ng defe ndantFootL ockerSpeci al t y , I nc. ’ s m ot i on t o di s m i s s . W e conc l ude t hatt he D i s t r i ctC our terr oneous l yappl i ed N ew J er s ey ’ s ent i r e contr over s ydoctr i ne t o bar t he pl ai nt i ff’ s s ui t . A ccor di ngl y , w e w i l l r ever s e and r emand.

In M ay2 0 0 2 , p lai n ti ff

(“o w n er” ) fil ed a c o m p lai n t i n N ew Jerse ystat e c o u rt t o r ecove rdamages on a def aul t ed l eas e. T he courtent er ed s um m aryj udgm enton li ab il ityag ains t def

en d an t ( “ten an t”) “fo r am o u n ts du e u n d er the L ea se th rou g h Jan u ary 31, 2006" a nd or der ed thatt he mat t er“pr ocee d fora det erm i nat i on of damages due [ o w n e r] .” T he l eas e pr ovi ded choi ces forthe r ecove r yof damages i n t he eve ntof defa ul t . O w nercoul d s eek ba ck r entpay abl e “i n m ont hl yi ns t al l m ent s . . . on t he r ent day s s peci fi ed i n t hi s L eas e and a nys ui tbr oughtt o col l ectthe amountof the def i ci ency3

foranym ont h [w oul d] notpr ej udi ce i n anyw aythe r i ght s of [ow ner ] t o col l ectthe defi ci encyforanys ubs equentm ont h bya s i m i l arpr ocee di ng. ” A s an al t ernat i ve, ow ner c o u ld p u rs u e a c c e le ra te d re n t, i . e. , “ a n a m o u n t e q u a l to th e d if f e re n c e b e tw e e n th e . . . [re n t] fro m the d ate o f [ the ten an t’ s] de fa u ltto the d ate o f e x p ir ati o n o f th e [ lease ’s] T erm . . . a n d th e th e n f

a ira n d re a s o n a b le re n ta l v a lu e (i n c lu s iv e o f . . . [ re n t] ) o f

th e . . . P re m is e s f

o r t h e s a m e p e ri o d .” B efor e the tr i al on damages began, t enantm oved i n l i m i ne to lim it o w n e r to t he ac cel er at ed r entopt i on. I n deny i ng the mot i on, the N ew J er s eycour thel d t hatthe t erm s of the l eas e al l ow ed the i s s ue of da m ages t o “be a ddr es s ed s er i at i m . ” The j udge e x p lain e d to c o u n se l:

“Ther e cl ear l yhas been l i abi l i t ydet erm i ned by[the p re v io u s ju d g e ] th a t . . . the [ ten a n t], i n f a c t, i s lia b le u p to in c lu s iv e o f

2 0 0 6 . T h a t’ s c le a r . . . . “W e do fi nd, i n addi t i on ther et o, thatther e ar e tw o opt i ons f o r b e in g re liev e d o r b e in g a d d re ss e d in d a m a g e s a t th is p o in t: [ (1 )] . . . [ th a t] sp e lls o u t f o r b a c k re n t at th a t ti m e o r w h ich is l es s gl obal or[( 2) ] forthe r ent s pr oj ect ed . . . . [The se cond o p ti o n ] do es re q u ir e a n ex p ert [to p rov e]. T h ere is no ex p ert her e and ther e i s no j udi ci al es t oppel beca us e thos e ar e the t w o opt i ons [ow ner ] had. “ A lth o u g h th e e n tire c o n tro v e rsy ratio n a le d o e s - w o u ld i ndi cat e thatw e s houl d r es ol ve thi s al l i n one fe l l s w oop, unfor tunat el yw i t h t hes e l eas es i n t he [c om m er ci al cont ext ] as t heyw er e, t heycan be addr es s ed s er i at i m . . . . [G ] i ven the t erm s of the l eas e, t her e i s no j udi ci al es t oppel . [The pr evi ous j udge] di d notrul e on anyt hi ng ot herthan l i abi l i t yat t achi ng forthe ful l per i od of t i m e.4 “ It is u p to th e [ o w n e r] th e n , b yth e ir m e a su re o f p ro o f , to pr ove thatt her e i s a quantum of damages , be thatforthe t ot al per i od of 2006 ors om e s al i entpor t i on ther eof. T he por t i on t hat theyhav e el ect ed to proceed w i t h . . . i s up to A ug ust1st of 2003. “They ’ ve el ect ed t o go w i t h back r ent. . . . [T]he r e i s no m is le a d in g [ h e re ] . . . . “ T h e y ’v e a lso in d ica ted . . . tha t th e y. . . w ill e n d e a v o r to pr ove damages t o A ugus tthe 1s t , 200[3] . . . . [T]hi s i s one of th e e le c tio n s th a t [ th e ] p a rt ie s n e g o tia te d a t a rm s le n g th . . . . [The] appl i cat i on [ i n l i m i ne ] i s d e n ie d a t th is p o in t.” T he mat t ert hen pr ocee ded t o a tr i al on damages . A ti t s concl us i on, the cour tfi l ed an or dert hat“J udgm entbe . . . ent er ed i n favorof [ow ner ] A l dr i ch . . . and a g a in st [ ten a n t] F o o t L o c k e r . . . f o r $ 1 ,1 5 0 ,6 3 2 .7 5 .” T e n a n t ap p e a led to th e A p p e llate D i vi s i on of the N ew J er s eySuper i orC our t . T her e, t enantchal l enged the “or dergr ant i ng p arti al su m m aryjud g m en t t o p lai n ti ff as to li ab il ity , a p re-tr ial ruli n g b arring the re p o rt and t es t i m onyof an e xper ton behal f of [ t enant ] , and s om e evi dent i aryrul i ngs dur i ng t he t r i al . ” In N o v em b er 2 0 0 5 , the A p p ell ate D ivisi o n co n clud ed that the “ tr ial co u rt w as corr ectt o deci de the l i abi l i t yi s s ue on s um m aryj udgm ent ” and a gr eed w i t h t he evi dent i aryrul i ngs . T he courts aw “no mer i ts uffi ci entt o w arr antfur t herdi s cus s i on” of th e re m a in in g is s u e s o n a p p e a l. T h e re w a s n o d is c u s s io n o f th e s e ri a tim d a m a g e ru lin g . In Ju ly2 0 0 6 , o w n e r f

iled a se c o n d c o m p lain t in th e N e w Je rse yc o u rt to obt ai n t he r emai ni ng damages underthe l eas e. I nvoki ng di ver s i t yj ur i s di ct i on, t enant5

r emoved t he ac t i on t o t he D i s t r i ctC our tforthe D i s t r i ctof N ew J er s eyand fi l ed a mot i on t o di s m i s s as s er t i ng a vi ol at i on of N ew J er s ey ’ s ent i r e contr over s ydoctr i ne and r es ju d ica ta . T he D i s t r i ctC our tgr ant ed the t enant ’ s m ot i on t o di s m i s s . E xpl ai ni ng t hat t he ent i r e contr over s ydoctr i ne contr ol l ed, the C our tfound i tunnece s s aryt o det erm i ne w h ethe r re s ju d ica ta a lso p re c lu d e d th e o w n e r’s su it.

O w nerappea l ed and now ar gues thatthe D i s t r i ctC our terr oneous l yappl i ed t he ent i r e contr over s ydoctr i ne t o barthe 2006 s ui t . T enantcount er s thatthe D i s t r i ct C our tpr oper l ygr ant ed the mot i on t o di s m i s s beca us e both t he ent i r e contr over s ydoctr i ne and re s ju d ica ta pr ohi bi t ed ow nerfr om br i ngi ng the s econd a ct i on.

S tat e c o u rtd ec isi o n s are g iven “the sam e p rec lusive ef fe ct i n fe d era l cou rt t heyw oul d be gi ven i n t he court s of the r ender i ng s t at e. ” D el . R i verPor tA uth. v. F ra te rn a l O rd e r o f

P o lic e , P e n n -J e rs e yL o d g e 3 0 , 2 9 0 F .3 d 5 6 7 , 5 7 3 (3 d C ir . 2 0 0 2 ). A ccor di ngl y , w e l ook t o t he pr ecl us i on l aw of N ew J er s ey . I d.

T he ent i r e contr over s ydoctr i ne “r equi r es thata per s on as s erti n one ac t i on al l r el at ed cl ai m s agai ns ta part i cul aradver s aryorbe pr ecl uded fr om br i ngi ng a s econd act i on bas ed on the omi t t ed cl ai m s agai ns tthatpart y . ” I n r e M ul l arkey , 536 F. 3d 215, 2 2 9 (3 d C ir . 2 0 0 8 ) ( q u o tin g M e lik ia n v . C o rr a d e tti, 7 9 1 F .2 d 2 7 4 , 2 7 9 (3 d C ir . 1 9 8 6 )) . “[A ] par t ycannotw i t hhol d par tof a c ont r over s yforl at erl i t i gat i on even w hen the w ith h e ld c o m p o n e n t is a s e p a ra te a n d in d e p e n d e n tly c o g n iz a b le c a u s e o f a c tio n .” Id .6 E x c e p tio n s to th e d o c trin e e x ist. It

“ d o e s n o t re q u ire th a t all c laim s a n d p a rties p ro c e e d to cul m i nat i on i n one l i t i gat i on. R ather , al l cl ai m s and part i es m u st i n it ial lyb e join ed tog ethe r be fo re o n e c o u rt . T h e c o u rt can de t erm i ne fori t s el f how bes tt o pr ocee d w i t h t he var i ous cl ai m s and part i es . I n or dert o exer ci s e thi s di s cr et i on, how ever , t he courtm us tbe ful l yi nform ed of the ext entof the c o n tr o v e rs yb e f

o re it.” P et rocel l i v. D aniel W oo dh ead C o. , 99 3 F . 2d 27 , 31 (3d C i r. 19 93 ); D i T rol i o v . A nti l es, 662 A . 2d 494, 504- 05 ( N . J . 1995) . T hus , w her e a tr i al cour t“has expr es s l yr es erved the pl ai nt i ff’ s r i ghtt o m ai nt ai n [a] s econd a ct i on orw her e [the court ’ s ] rul i ngs on r el at ed issue s ind icate itw as li k elyto h av e re serv ed that ri g h t, the p rec lusive ef fe ct of the e n ti re contr over s y[doctr i ne] does notappl y . ” D i I or i o v. St ructual St one & B r i ck C o. , 845 A . 2d 658, 661 ( N . J . Super . C t . A pp. D i v. 2004) ; s ee a l s o B r ow n v. B r ow n, 506 A . 2d 29, 35- 36 (N . J. S up er. C t . A pp . D i v. 19 86 ) ( t he d octr i ne d oes no tapp l yw hen “t he co urti n the fi rs t act i on has expr es s l yr es erved the pl ai nt i ff’ s r i ghtt o m ai nt ai n t he s econd a ct i on”( quot i ng R estatem en t ( S ec o n d ) of Ju d g m en ts § 2 6 (1)(b ))) . A p arty ’s “c o n d u ct m ay[a lso] esto p h im fro m rely ing o n ” the en ti re contr over s ydoctr i ne. B r ow n, 506 A . 2d at35. E xempt fr om “the cl ai m - s pl i t t i ng bar[ar e] t hos e cl ai m s as t o w hi ch ‘ t he part i es have a gr eed i n t erm s ori n eff ectthatthe pl ai nt i ff m ays pl i thi s cl ai m , ort he def endanthas acqui es ced ther ei n. ’ ” I d. ( quot i ng R es t at ement (S ec o n d ) of

Ju d g m en ts § 2 6 (1)(a)).7 O u r re v iew o f

th e re c o rd c o n v in c e s u s th a t th e D istric t C o u rt e rre d in con cl ud i ng t hat the en t i re cont rovers ydo ct ri ne b arr ed the ow ner’ s 200 6 suitagainst t enant . A l l cl ai m s and part i es had bee n j oi ned i n 2002 befor e the N ew J er s eytr i al j udge, w h o u n d e rsto o d th e f

u ll ex ten t o f

th e c o n tro v e rsy be tw e e n th e p a rties , ex e rc ise d h is d iscreti o n to allow o w n er to se ek o n lyb ac k ren t atthat ti m e, an d p rese rve d the o w n er’s abi l i t yt o pur s ue damages i n t he futur e. A ccor di ngl y , the D i s t r i ctC our ts houl d nothave a p p lie d th e e n tir e c o n tr o v e rs yd o c tr in e to g ra n t th e te n a n t’ s m o tio n to d is m is s .

T hough notaddr es s ed bythe D i s t r i ctC our t , w e fi nd re s ju d ica ta t o be equal l yi nappl i cabl e. “[ R ] es j udi cata r efe r s . . . t o t he comm on- l aw doctr i ne barr i ng r el i t i gat i on of cl ai m s ori s s ues t hathave a l r eadybeen a dj udi cat ed. ” V el as quez v. Fr anz, 589 A . 2d 143, 147 ( N . J . 1991) ( i nt ernal quot at i on m arks om i t t ed) . N ew J er s eyappl i es re s ju d ica ta “ w h e n th re e c irc u m sta n c e s a re p re se n t: ‘(1 ) a f in a l ju d g m e n t o n th e m e rits in a pr i ors ui ti nvol vi ng ( 2) t he s ame par t i es orthei rpr i vi es and ( 3) a s ubs equents ui tbas ed o n the s am e c au se o f a cti o n . ’” In re M u ll ark ey , 5 3 6 F . 3 d at 22 5 (qu o ti n g P o st v. H artfo rd In s . C o ., 5 0 1 F .3 d 1 5 4 , 1 6 9 (3 d C ir . 2 0 0 7 )) .

A m at t erhas been a ctual l yl i t i gat ed w hen the “i s s ue [w a] s pr oper l yr ai s ed, byt he pl eadi ngs orot herw i s e, and i s s ubm i t t ed fordet erm i nat i on, and i s det erm i ned. ” V e la s q u e z , 5 8 9 A .2 d a t 1 4 7 (q u o tin g R e s ta te m e n t ( S e c o n d ) o f J u d g m e n ts § 2 7 c m t. d ). F u r t h e r m o r e , w e h a v e d e t e r m i n e d t h a ti n N e w J e r s e y re s ju d ica ta w o u ld n o t bar a s ucce s s i ve s ui tw hen a tr i al j udge has “expr es s l ypr es erved . . . cl ai m s fora futur e ac t i on. ”8

V enut o v. W i t co C orp. , 117 F. 3d 754, 758 ( 3d C i r . 1997) ; s ee a l s o R es t at ement( Second) of J udgm ent s § 26 cmt . b ( “A det erm i nat i on bythe courtthati t s j udgm enti s ‘ w i t hout p re ju d ic e ’ ( o r w o rd s to th a t e f f e c t) to a s e c o n d a c tio n o n th e o m itte d p a rt o f th e c la im . . . sh o u ld o rdin aril yb e g iven ef fe ct i n the s ec o n d ac ti o n ”). T he r ecor d r evea l s t hatthe j udgm enti n t he 2002 ac t i on es t abl i s hed the ten a n t’s lia b ili tyth ro u g h Ja n u a ry3 1 , 2 0 0 6 , b u t aw a rd e d d a m a g e s o n lyf o r th e p e rio d u p to A ugus t1, 2003. L os s es fr om A ugus t2, 2003, though J anuary31, 2006, w er e not s u b m itte d f

o r d e te rm in a tio n n o r i n c lu d e d in th e ju d g m e n t. T her efor e, a N ew J er s eycour tw oul d nothave us ed re s ju d ica ta a s a b a sis forgr ant i ng t he t enant ’ s m ot i on t o di s m i s s . A fi nal j udgm entas t o al l of the damages due t o ow nerdi d notexi s tatt he cul m i nat i on of the 2002 s ui t , and ow nerhad r ece i ved p e rm iss io n to p u rsu e a f u tu re a c tio n f

o r th e a m o u n ts o w e d f

ro m A u g u st 2 , 2 0 0 3 , to J anuary31, 2006.

A c c o rd in g ly , the D istric t C o u rt e rre d in g ra n tin g th e ten a n t’s m o tio n to d ism iss. B ec au se n eith er the en ti re c o n tr o v ersyd o ctri n e n o r re s ju d ica ta b ar the o w n er’s 2 0 0 6 a c tio n , w e w ill re v e rse a n d re m a n d w ith d ire c tio n s th a t th e ten a n t’s m o tio n to d is m is s b e d e n ie d .